From April 1st, 2020, you’ll be hit with a whopping 45% "non-declaration rate" on interest and dividends if you fail to give the interest payer your IRD number.
The Inland Revenue Department (IRD, who collect taxes for the NZ government) has issued new guidance on resident withholding tax (RWT) for interest and dividends from bank accounts and investments. RWT is the type of tax you pay on interest held in bank accounts, and on other payments you might receive such as dividends.
The rules are designed to ensure everyone is paying the right rate, and to ensure everyone notifies relevant institutes – such as banks – of their IRD number.
From April 2020, individuals will face a 45% annualised tax rate if they fail to notify the interest payer of their IRD number. If they do provide their IRD number but forget to choose a RWT rate, they’ll be charged a default rate of 33%.
It would be wise to check that your bank has your IRD number accurately recorded – and to check with anyone else who might need it for the same reasons. If they don’t, you could be stung with a substantial 45% tax rate on any of your earnings!